SaaS Financial Model: The Complete Template Guide
A well-built SaaS model captures the unique economics of recurring revenue: predictable income, cohort dynamics, and the power of expansion revenue. Here's how to build one.
SaaS financial models differ from traditional models because revenue is earned continuously rather than in discrete transactions. As the cornerstone of your financial model, the SaaS revenue engine creates predictability but also complexity—you need to track cohorts, model churn, and understand how expansion compounds over time. Many growing SaaS companies work with a fractional CFO to build investor-ready models.
The SaaS Advantage
Recurring revenue is valued higher than one-time revenue because it's predictable. A well-built model that demonstrates strong unit economics and low churn can command revenue multiples 2-3x higher than transactional businesses.
SaaS Model Structure
A comprehensive SaaS model includes several interconnected components that feed into your 3-statement model. For guidance on building the revenue foundation, see revenue modeling approaches.
Recommended Tab Structure
Input Tabs
- Assumptions
- Pricing by tier
- Sales capacity model
- Marketing spend
Revenue Tabs
- New logo waterfall
- Cohort analysis
- MRR/ARR bridge
- Revenue recognition
Output Tabs
- P&L summary
- SaaS metrics dashboard
- Cash flow
- Scenario comparison
Key Input Categories
| Category | Key Inputs | Source |
|---|---|---|
| Pricing | ACV by tier, pricing changes, discounting | Product/Sales |
| Sales | Quota, attainment, ramp, capacity | Sales Ops |
| Marketing | CAC by channel, conversion rates | Marketing |
| Retention | Churn rates, expansion rates by segment | Customer Success |
MRR/ARR Modeling
The MRR waterfall is the heart of any SaaS model. It breaks down revenue changes into their component parts, making it easy to understand what's driving growth.
MRR Waterfall Components
New MRR
Revenue from new customers acquired in the period.
Formula: New Customers × Average Starting MRR
Expansion MRR
Revenue growth from existing customers (upgrades, seat additions).
Formula: Beginning MRR × Expansion Rate
Reactivation MRR
Revenue from previously churned customers who return.
Formula: Reactivated Customers × Average MRR
Churned MRR
Revenue lost from customers who cancel completely.
Formula: Beginning MRR × Churn Rate
Contraction MRR
Revenue reduction from downgrades or seat removals.
Formula: Beginning MRR × Contraction Rate
Example MRR Bridge
| Component | Jan | Feb | Mar |
|---|---|---|---|
| Beginning MRR | $100,000 | $108,000 | $116,600 |
| + New MRR | +$10,000 | +$11,000 | +$12,000 |
| + Expansion MRR | +$3,000 | +$3,200 | +$3,500 |
| - Churned MRR | -$4,000 | -$4,300 | -$4,700 |
| - Contraction MRR | -$1,000 | -$1,300 | -$1,400 |
| = Ending MRR | $108,000 | $116,600 | $126,000 |
Net Revenue Retention
NRR = (Beginning MRR + Expansion - Churn - Contraction) / Beginning MRR. Best-in-class SaaS companies achieve 110%+ NRR, meaning existing customers alone drive growth even without new sales.
Cohort-Based Modeling
Cohort-based models track each customer acquisition period separately, providing more accurate forecasts by recognizing that newer customers behave differently than older ones.
Why Cohorts Matter
Churn Patterns Change
First-year churn is typically higher than subsequent years. Cohort modeling captures this nuance.
Expansion Timing
Customers often expand 6-12 months after initial purchase. Cohorts model this lag accurately.
Product Changes
Customers acquired after a major product update may have different retention profiles.
GTM Evolution
Different acquisition channels or pricing strategies affect customer quality and LTV.
Cohort Retention Curve
| Cohort | Month 0 | Month 3 | Month 6 | Month 12 | Month 24 |
|---|---|---|---|---|---|
| Q1 2025 | 100% | 92% | 86% | 78% | 72% |
| Q2 2025 | 100% | 94% | 88% | 82% | - |
| Q3 2025 | 100% | 95% | 90% | - | - |
This example shows improving retention in newer cohorts, likely due to product improvements or better customer fit. Your model should project future cohorts based on the most recent patterns.
Integrating SaaS Metrics
Your model should automatically calculate key SaaS metrics that investors and boards will want to see.
Essential SaaS Metrics
| Metric | Formula | Benchmark |
|---|---|---|
| ARR Growth | (Ending ARR - Beginning ARR) / Beginning ARR | 50%+ early stage, 30%+ at scale |
| Net Revenue Retention | (Begin + Expansion - Churn - Contract) / Begin | >100%, ideally >110% |
| Gross Margin | (Revenue - COGS) / Revenue | >70% for software |
| CAC Payback | CAC / (ARPU × Gross Margin) | <18 months |
| LTV:CAC | (ARPU × Gross Margin × Lifetime) / CAC | >3:1 |
| Rule of 40 | Revenue Growth % + EBITDA Margin % | >40% |
Metric Consistency
Define your metrics clearly and stick to those definitions. Investors get frustrated when CAC is calculated differently in each presentation or when MRR includes non-recurring revenue.
Investor Presentation Tips
What Investors Want to See
- ARR bridge: Clear waterfall showing new, expansion, churn, and contraction components
- Cohort data: Visual retention curves showing improvement over time
- Unit economics trend: LTV:CAC improving as you scale
- Path to profitability: When do you expect to reach Rule of 40 or cash flow positive
- Sensitivity analysis: How outcomes change if churn increases or growth slows. See our sensitivity analysis guide for building scenario models
Common Presentation Mistakes
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